Sierra Bancorp (BSRR)

[US Market News]

Sierra Bancorp Reports First Quarter 2026 Results

April 27, 2026 8:01 AM
Business Wire

Sierra Bancorp (Nasdaq: BSRR), parent of Bank of the Sierra, today announced its unaudited financial results for the quarter ended March 31, 2026. Sierra Bancorp reported consolidated net income of $12.5 million, or $0.96 per diluted share, for the first quarter of 2026 compared to $9.1 million, or $0.65 per diluted share, in the first quarter of 2025.

Highlights for the First Quarter of 2026 (unless otherwise stated):

• 
  Strong Quarterly Earnings Metrics
  
  
  
  • 
    Diluted earnings per share increased $0.31, or 47%, from the same quarter in 2025.
    
    
  
  
  • 
    Return on average assets improved to 1.39% compared to 1.02% for the same quarter in 2025.
    
    
  
  
  • 
    Return on average equity rose to 13.88% compared to 10.44% for the same quarter in 2025.
    
    
  
  
  
  
  


• 
  Focus on Profitability
  
  
  
  • 
    Net interest margin increased to 3.75% as compared to 3.74% in the first quarter of 2025.
    
    
  
  
  • 
    Annualized noninterest income to average assets improved to 0.88% as compared to 0.75% in the first quarter of 2025.
    
    
  
  
  • 
    Efficiency ratio ⁽¹⁾ improved to 56.45% as compared to 60.62% in the same quarter in 2025 with overall expenses declining 2.6% as compared to the same period in 2025.
    
    
  
  
  
  
  


• 
  Growth to our Strong Low-Cost Deposit Base
  
  
  
  • 
    Total deposits increased $75.9 million, or 3%, as compared to March 31, 2025.
    
    
  
  
  • 
    Excluding brokered deposits, deposits increased $49.1 million, or 2%, from the prior linked quarter.
    
    
  
  
  • 
    Noninterest-bearing deposits of $1.03 billion at March 31, 2026, represent 35% of total deposits.
    
    
  
  
  • 
    Cost of funds declined to 1.33% in the first quarter of 2026 as compared to 1.46% in the same quarter in 2025.
    
    
  
  
  • 
    Uninsured deposits are approximately 24% of total deposit balances.
    
    
  
  
  
  
  


• 
  Stable Capital and Liquidity
  
  
  
  • 
    Increased Tangible Book Value ⁽¹⁾ per share by 1% to $25.69 per share during the quarter.
    
    
  
  
  • 
    The Community Bank Leverage Ratio increased to 12.05% for our subsidiary bank as compared to 11.94% as of December 31, 2025.
    
    
  
  
  • 
    Repurchased 263,632 shares during the quarter, or 2% of shares outstanding at December 31, 2025.
    
    
  
  
  • 
    Declared dividend of $0.26 per share, payable on May 11, 2026.
    
    
  
  
  • 
    Wholesale funding, including brokered deposits, is used primarily to fund the mortgage warehouse business line which provides a strong match of duration.
    
    
  
  
  • 
    Overall primary and secondary liquidity sources of $2.1 billion at March 31, 2026.
    
    
  
  
  • 
    Primary liquidity ratio increased to 19.8% at March 31, 2026, from 19.1% at December 31, 2025.
    
    
  
  
  
  
  

_______________________________
(1)		See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures."

“Discipline is the bridge between goals and accomplishment.” – Jim Rohn

“I am extremely proud to report a strong start to 2026!” stated Kevin McPhaill, CEO and President. “Profitability remains our top strategic priority as shown by our consistently high ROAA of 1.39%. Furthermore, this was our fifth consecutive quarter of improvement to our efficiency ratio, which is directly attributable to ongoing expense management discipline. We have redoubled our community banking efforts within our branch network, resulting in an increase of 2% in core customer deposits during the first quarter. We are extremely proud of these continued strong results, and I believe the remainder of 2026 will further demonstrate our discipline, drive, and commitment to excellence!” concluded Mr. McPhaill.

Quarterly Changes (comparisons to the first quarter of 2025)

• 
  Net income for the first quarter of 2026 increased $3.4 million, or 38%, to $12.5 million. There were favorable changes in every major income statement category, excluding income tax, including a decrease in provision for credit losses of $2.0 million, or 99%, an increase in net interest income of $0.5 million, or 2%, an increase in noninterest income of $1.3 million, or 20%, and a $0.6 million, or 3%, reduction in noninterest expense.
  
  


• 
  Pre-tax pre-provision income⁽¹⁾ was $16.8 million, an increase of $2.4 million, or 17%.
  
  

Linked Quarter Changes (comparisons to the three months ended December 31, 2025)

• 
  Net income decreased by $0.4 million, or 3%, due mostly to a decrease of $1.3 million in net interest income and an increase of $0.9 million in the credit loss expense. These unfavorable changes were partially offset by an increase in noninterest income of $0.6 million, or 9%, and a reduction in noninterest expense of $1.2 million, or 5%.
  
  


• 
  The $0.9 million increase in the provision for credit losses was due primarily to a $1.5 million favorable release of individual reserves in the fourth quarter of 2025 from two separate relationships.
  
  


• 
  Noninterest income increased by $0.6 million, due to a special dividend received from the FHLB of $0.4 million and an increase in the annual valuation of bank stocks of $0.6 million. These were partially offset by a decrease in separate account life insurance income of $0.5 million, which is designed to offset deferred compensation.
  
  


• 
  Noninterest expenses declined $1.2 million, mostly due to a $0.7 million favorable variance in deferred compensation expenses, which is mostly offset by changes to separate account life insurance income.
  
  


• 
  Pre-tax pre-provision income⁽¹⁾ increased $0.5 million, or 3%.
  
  

Balance Sheet Quarterly Changes (comparisons to December 31, 2025)

• 
  Total assets decreased slightly by 2%, or $74.8 million, to $3.8 billion, during the first three months of 2026, due mostly to a decline in loans.
  
  


• 
  Gross loans decreased $80.1 million, due to a $39.9 million seasonal decrease in mortgage warehouse line utilization coupled with declines in line utilization and new credit extended.
  
  


• 
  Deposits increased by $49.4 million, or 2%. The increase in deposits came from a $56.8 million increase in core customer deposits, partially offset by a $7.7 million decline in customer time deposits.
  
  

_______________________________
(1)		See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures."

Other financial highlights are reflected in the following table.

FINANCIAL HIGHLIGHTS
(Dollars in Thousands, Except Per Share Data, Unaudited)
			As of or for the
			three months ended
			3/31/2026				12/31/2025				3/31/2025
Net income		$	12,520			$	12,894			$	9,101
Diluted earnings per share		$	0.96			$	0.97			$	0.65
Return on average assets			1.39	%			1.39	%			1.02	%
Return on average equity			13.88	%			14.09	%			10.44	%
Net interest margin (tax-equivalent) (1)			3.75	%			3.79	%			3.74	%
Yield on average loans			5.26	%			5.34	%			5.26	%
Yield on investments			4.44	%			4.52	%			4.81	%
Cost of average total deposits (3)			1.17	%			1.14	%			1.33	%
Cost of funds (3)			1.33	%			1.38	%			1.46	%
Efficiency ratio (tax-equivalent) (1) (2)			56.45	%			57.69	%			60.62	%
Total assets		$	3,754,462			$	3,829,279			$	3,606,183
Gross loans, amortized cost		$	2,466,794			$	2,546,845			$	2,306,663
Noninterest demand deposits		$	1,028,678			$	995,623			$	1,037,990
Total deposits		$	2,925,806			$	2,876,436			$	2,849,884
Noninterest-bearing deposits over total deposits			35.2	%			34.6	%			36.4	%
Shareholders' equity / total assets			9.69	%			9.53	%			9.75	%
Tangible common equity ratio (2)			9.02	%			8.88	%			9.05	%
Book value per share		$	27.78			$	27.49			$	25.45
Tangible book value per share (2)		$	25.69			$	25.42			$	23.44
Community bank leverage ratio (subsidiary bank)			12.05	%			11.94	%			12.11	%
Tangible common equity ratio (subsidiary bank) (2)			11.07	%			10.92	%			11.32	%

(1)		Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
(2)		See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".
(3)		Includes noninterest bearing deposits.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income was $30.6 million for the first quarter of 2026, a decrease of $1.3 million, or 4%, compared to the fourth quarter of 2025, and an increase of $0.5 million, or 2%, compared to the first quarter of 2025.

The linked-quarter decrease was driven primarily by lower interest income, partially offset by reduced interest expense. Interest income declined by $2.1 million compared to the linked quarter, due mostly to a $1.9 million decrease in loan interest income, driven in part by two fewer days in the current quarter compared to the prior linked quarter, a $0.8 million decline in mortgage warehouse interest due to seasonality, as well as lower commercial loan utilization, and a decline in average balances of real estate loans. The decline in loan interest was partially offset by a favorable decline in interest expense of $0.7 million in the linked quarter comparison, due to lower rates.

Compared to the first quarter of 2025, interest income decreased modestly due to lower yields on investments and changes in balance sheet mix, while interest expense declined primarily due to lower rates on interest-bearing liabilities, reflecting repricing and improved funding mix, despite a modest increase in average interest-bearing liability balances.

Net interest margin was 3.75% for the first quarter of 2026, compared to 3.79% for the linked quarter and 3.74% for the first quarter of 2025.

Compared to the fourth quarter of 2025, the net interest margin declined four basis points, reflecting lower yields on interest-earning assets, partially offset by continued improvement in funding costs. The yield on average interest-earning assets declined to 5.04% from 5.12%, driven primarily by lower yields on mortgage warehouse and investments.

The cost of interest-bearing liabilities declined to 1.94%, from 2.03% in the prior quarter, reflecting lower average balances of borrowed funds and proactive management of deposit pricing. Average interest-earning assets declined $34.7 million from the prior linked quarter, while average interest-bearing liabilities declined $2.1 million, contributing to the modest compression in margin.

Compared to the first quarter of 2025, the net interest margin increased by one basis point, reflecting the benefit of lower funding costs, partially offset by modest pressure on asset yields. The cost of average total deposits declined to 1.17%, from 1.33% in the first quarter of 2025, while the cost of interest-bearing liabilities declined to 1.94%, from 2.15%, reflecting an improved funding mix, lower average balances of higher-cost deposits and borrowings, and reduced overall funding costs resulting from the rate cuts in the second half of 2025.

These favorable funding cost trends were partially offset by lower yields on investment securities, as assets repriced in a lower rate environment, resulting in overall margin stability year over year.

Overall, the Company continues to benefit from improving funding costs, which have largely offset pressure on asset yields, resulting in a stable net interest margin compared to the prior year and only modest compression as compared to the linked quarter. Management expects net interest margin performance to remain influenced by balance sheet mix, investment security reinvestment rates, and the timing of deposit repricing.

Credit Loss Expense

The Company recorded a provision for credit losses on loans of $0.1 million for the first quarter of 2026, compared to a reserve release of $0.8 million in the fourth quarter of 2025 and a provision of $2.0 million in the first quarter of 2025. The $0.8 million release in allowance for credit losses during the fourth quarter of 2025 was due mostly to the $1.5 million release of specific reserve on loans individually evaluated, partially offset by higher reserve on loans collectively evaluated. The provision recorded during the first quarter of 2026 reflects normal portfolio activity and estimated credit losses, partially offset by net loan charge-offs.

Credit loss expense on unfunded loan commitments was a benefit of $0.05 million in the first quarter of 2026, compared to a benefit of $0.08 million in the linked quarter and expense of $0.1 million in the first quarter of 2025, reflecting changes in the level and composition of unfunded commitments. The reason for the decrease in the first quarter of 2026 is due to a decrease in the balance of unfunded commitments in most loan categories and a decline in combined funding and loss rates.

The unrealized loss position on the Company’s investment portfolio was attributable to changes in interest rates and volatility in the financial markets and not reflective of expected credit loss.

Noninterest Income

Noninterest income increased $0.6 million, or 9%, to $8.0 million in the first quarter of 2026, compared to the fourth quarter of 2025. Noninterest income increased $1.3 million, or 20%, compared to the first quarter of 2025.

The $1.3 million increase in noninterest income in the first quarter of 2026, as compared to the same quarter in 2025, was due to higher service charge and fee income, an increase in cash surrender value of life insurance due to purchases of additional life insurance in the second quarter of 2025, and other increases related to higher FHLB dividend income and an increase in the fair value of bank stocks. The $0.6 million increase in noninterest income as compared to the fourth quarter of 2025 was driven primarily by a $1.0 million increase in the other noninterest income category, including a $0.4 million special dividend from the FHLB and an increase in value of bank stocks of $0.6 million. These favorable variances were partially offset by a decrease in separate account life insurance income of $0.5 million which is designed to offset deferred compensation, and lower service charges and fees on deposit accounts, which declined $0.3 million, reflecting seasonal trends in business analysis fees and other deposit-related charges. Although overall service charges and fees on deposit account income declined on a linked-quarter basis, there was a positive increase in the second half of the quarter related to interchange income on debit cards.

The Company maintains a non-qualified deferred compensation plan for officers and directors, under which participants may defer a portion of their earnings and select from various hypothetical investment alternatives to determine their individual returns. The Company economically offsets this liability with separate account life insurance policies that are invested in similar underlying fund types within the life insurance policy. Because the deferred compensation liability and the separate account life insurance asset are not contractually linked, differences in balances, fund performance, and insurance costs can result in temporary timing mismatches between changes in separate account life insurance income and the related deferred compensation expense.

During the first quarter of 2026, declines in market values of investments inside the life insurance policy to offset employee and director deferred compensation plan elections resulted in a $0.4 million net loss related to separate account life insurance, while the related deferred compensation liability experienced a $0.6 million benefit as the funds that the plan participants elected declined in value. These offsetting movements reflect market-driven changes in the underlying investment alternatives and do not represent credit- or performance-related deterioration.

The majority of the deferred compensation expense/(benefit) is reported within professional fees, under deferred directors’ fees, as it primarily relates to the deferral of directors’ compensation. Specifically, $0.6 million of deferred compensation benefit was recorded as deferred directors’ fees during the first quarter of 2026. The related tax shortfall associated with the loss connected with separate account life insurance and taxable deferred compensation expense/(benefit) totaled $0.3 million for the quarter.

Noninterest Expense

Total noninterest expense decreased $1.2 million, or 5%, to $21.8 million in the first quarter of 2026, compared to the fourth quarter of 2025, and decreased $0.6 million, or 3%, compared to the first quarter of 2025. The primary driver of lower noninterest expense in both comparisons was lower deferred compensation expense, reflecting market-driven changes in the related deferred compensation liability. Excluding the change in deferred compensation, total noninterest expense declined $1.0 million in the first quarter of 2026 as compared to the fourth quarter of 2025.

The decrease in deferred compensation expense was mostly offset by lower separate account life insurance income, as declines in market values during the quarter resulted in a loss related to separate account life insurance policies, consistent with the discussion above. These offsetting movements reflect normal market-related volatility between the separate account life insurance asset and the deferred compensation liability.

Salaries and benefits were relatively stable compared to both the linked quarter and the same period last year, with modest period-to-period changes primarily related to normal compensation timing and benefit costs. Occupancy expense declined modestly compared to the linked quarter and remained relatively consistent year over year, reflecting disciplined expense management.

Other noninterest expense declined compared to both the linked quarter and the prior year, driven primarily by lower deferred directors’ compensation expense/(benefit) and continued cost control across operating expense categories.

The Company's effective tax rate was 25.2% in the first quarter of 2026 relative to 24.8% in the fourth quarter of 2025, and 25.8% for the first quarter of 2025. The variances in the effective tax rates are due to fluctuations in tax credits and related amortization, benefits related to employee stock compensation, and tax-exempt income as a percentage of total taxable income.

Balance Sheet Summary

The $74.8 million decrease in total assets during the first quarter of 2026 was a result of a $13.2 million decrease in investment securities and an $80.1 million decrease in gross loans, partially offset by a $20.8 million increase in cash and due from balances.

Investment securities decreased $13.2 million, or 1%, to $903.0 million primarily due to paydowns in the portfolio, which were partially used to pay down other interest-bearing liabilities.

Gross loan balances decreased $80.1 million, or 3%, during the first quarter of 2026, reflecting lower mortgage warehouse line utilization, portfolio runoff, changes in commercial line utilization, and lower volumes of new credit extended. Mortgage warehouse balances declined $39.9 million, driven by seasonal activity and early-quarter paydowns. Excluding mortgage warehouse activity, loan balances declined modestly across several portfolios, including decreases of $9.1 million in commercial real estate loans, $19.9 million in other commercial loans, $9.7 million in residential real estate loans, $2.1 million in farmland loans, and $0.2 million in consumer loans. Other construction loans increased $0.8 million during the quarter.

As indicated in the loan rollforward below, new credit extended for the first quarter of 2026 decreased $19.0 million over the linked quarter comparison and $58.6 million over the same period in 2025. For the first three months ended 2026, we had $25.3 million in loan paydowns and maturities, along with a $22.6 million decrease in line of credit utilization, and a $39.9 million decrease in mortgage warehouse utilization. The reduction in new credit extended is primarily due to a strategic shift in our target customer base with a change to increase granularity within the portfolio by focusing more on serving our local communities, as well as expanded commercial real estate lending. It is taking time to refresh the pipeline, but such pipeline had returned to prior quarter levels by the end of March 2026.

LOAN ROLLFORWARD
(Dollars in Thousands, Unaudited)
		For the three months ended:
			3/31/2026				12/31/2025				3/31/2025
Gross loans beginning balance		$	2,546,880			$	2,491,779			$	2,331,341
New credit extended			7,811				26,794				66,370
Changes in line of credit utilization (1)			(22,592	)			6,230				(12,129	)
Change in mortgage warehouse			(39,880	)			65,651				(46,139	)
Pay-downs, maturities, charge-offs and amortization			(25,328	)			(43,574	)			(32,681	)
Gross loans ending balance			2,466,891				2,546,880				2,306,762
Deferred costs and (fees), net			(97	)			(35	)			(99	)
Gross loans, amortized cost		$	2,466,794			$	2,546,845			$	2,306,663

____________________________
(1)		Change does not include new balances on lines of credit extended during the respective periods as such balances are included as part of “New credit extended” line above.

A summary of the Company’s unfunded commitments and utilization is presented below (dollars in thousands, unaudited):

		March 31, 2026							December 31, 2025							March 31, 2025
		Line Available (2)				Utilization %			Line Available (2)				Utilization %			Line Available (2)				Utilization %
Real estate:
Residential real estate		$	14,393			44.37	%		$	15,726			44.50	%		$	19,311			42.17	%
Commercial real estate			20,132			88.38	%			23,203			86.93	%			33,129			82.79	%
Other construction/land			1,740			86.22	%			2,634			79.10	%			7,161			27.67	%
Farmland			2,544			82.45	%			3,126			80.20	%			5,639			63.73	%
Total real estate			38,809			82.85	%			44,689			80.92	%			65,240			74.05	%
Other commercial			193,442			45.07	%			187,084			48.81	%			197,259			44.36	%
Consumer			4,538			23.11	%			4,580			24.29	%			4,879			23.33	%
Subtotal (1)			236,789			59.48	%			236,353			61.00	%			267,378			56.33	%
Mortgage warehouse lines			319,546			59.96	%			247,667			67.67	%			414,769			40.58	%
Overdrafts - Commercial and Consumer			68,188			1.43	%			69,112			1.40	%			72,238			1.08	%
Total		$	624,523			56.98	%		$	553,132			61.64	%		$	754,385			45.49	%
Unused commitment as a percent of gross loans, amortized cost			25.32	%						21.72	%						32.70	%
Unused mortgage warehouse commitments as percent of gross loans, amortized cost			12.95	%						9.72	%						17.98	%

__________________________________
(1)		Excludes mortgage warehouse lines and overdraft lines.
(2)		Represents unfunded loan commitments available to customers.

Deposit balances increased $49.4 million, or 2%, during the first quarter of 2026, to $2.9 billion at March 31, 2026. Core non-maturity deposits increased $56.8 million for the first three months of 2026, reflecting continued growth in customer transaction accounts, while higher-cost customer time deposits declined $7.7 million during the quarter. Noninterest-bearing deposits totaled $1.03 billion at March 31, 2026, representing 35.2% of total deposits, compared to 34.6% at December 31, 2025, and 36.4% at March 31, 2025. Other interest-bearing liabilities totaled $185.0 million at March 31, 2026, compared to $302.7 million at December 31, 2025, reflecting a reduction in short-term borrowings during the quarter. These balances consisted of overnight borrowings of $130.0 million and $55.0 million of term Federal Home Loan Bank advances.

Overall uninsured deposits are estimated to be $710.0 million, or 24% of total deposit balances, excluding public agency deposits that are subject to collateralization through a letter of credit issued by the FHLB. In addition, uninsured deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash Sweep account or a reciprocal time deposit through the Certificate of Deposit Account Registry System (CDARS). IntraFi allows for up to $285 million of combined pass-through FDIC insurance which would more than cover each of the Bank’s deposit customers if such customer desired to have such pass-through insurance. The Bank maintains a diversified deposit base with no significant customer concentrations and does not bank any cryptocurrency companies. At March 31, 2026, the Company had approximately 116,000 accounts and the 25 largest deposit balance customers had balances of approximately 10% of overall deposits. During the first quarter of 2026, except for seasonal fluctuations in the normal course of business, there have been no material changes in the composition of our 25 largest deposit balance customers.

The Company continues to have substantial liquidity. At March 31, 2026, and December 31, 2025, the Company had the following sources of primary and secondary liquidity (dollars in thousands, unaudited):

Primary and secondary liquidity sources			3/31/2026			12/31/2025
Cash and cash equivalents		$	156,372		$	135,628
Unpledged investment securities			539,347			551,406
Excess pledged securities			191,145			192,275
FHLB borrowing availability			657,040			629,481
Unsecured lines of credit			331,785			250,785
Secured lines of credit			25,000			25,000
Funds available through fed discount window			244,039			254,908
Totals		$	2,144,728		$	2,039,483

Total equity of $363.7 million at March 31, 2026, reflects a decrease of $1.1 million compared to December 31, 2025. The decrease in equity during the first quarter of 2026 was due to $9.5 million in share repurchases, a $3.4 million dividend paid to shareholders, and a $1.8 million unfavorable swing in other comprehensive income/loss due principally to the increase in treasury rates in March and the corresponding decline in our investment securities’ fair value. These changes were partially offset by $12.5 million in net income recorded during the quarter. The remaining difference was related to activity from stock options and restricted stock during the year.

Asset Quality

Total nonperforming assets, decreased by $4.4 million, or 30%, to $10.4 million, during the first quarter of 2026. The decrease in non-accrual loans was from the successful paydown of the Company’s largest nonaccrual loan. The Company's ratio of nonperforming assets to loans plus foreclosed assets decreased to 0.42% at March 31, 2026, from 0.58% at December 31, 2025.

The Company's allowance for credit losses on loans was $21.3 million at March 31, 2026, as compared to $21.5 million at December 31, 2025, and $27.1 million at March 31, 2025. The decrease was primarily attributable to a decrease in the quantitative reserves due to reduced loan balances, partially offset by a $0.5 million increase in the allowance for loans individually evaluated, specifically related to a single agricultural production loan relationship that moved to nonaccrual during the first quarter of 2026. The allowance was 0.86% of total loans at March 31, 2026, 0.84% of total loans at December 31, 2025, and 1.17% of total loans at March 31, 2025.

The following tables highlight the coverage ratios by loan category at March 31, 2026, December 31, 2025, and March 31, 2025:

Allowance for Credit Losses on Loans by Category
(Dollars in Thousands, Unaudited)
		As of March 31, 2026
			Balance			Total Allowance		Percent of Portfolio			Coverage Ratio (1)
Real estate:
Commercial real estate		$	1,381,770		$	15,977		56.01	%		1.16	%
Other construction/land			15,242			299		0.62	%		1.96	%
Farmland			66,218			542		2.68	%		0.82	%
Total real estate (2)			1,463,230			16,818		59.32	%		1.15	%
Other Commercial			172,653			2,351		7.00	%		1.36	%
Consumer loans (including overdrafts)			2,597			109		0.11	%		4.20	%
Subtotal (2) (3)			1,638,480			19,278		66.42	%		1.18	%
Residential real estate			349,860			1,368		14.18	%		0.39	%
Mortgage warehouse lines			478,454			604		19.40	%		0.13	%
Gross loans, amortized cost		$	2,466,794		$	21,250		100.00	%		0.86	%

		As of December 31, 2025
			Balance			Total Allowance		Percent of Portfolio			Coverage Ratio (1)
Real estate:
Commercial real estate		$	1,390,890		$	16,354		54.61	%		1.18	%
Other construction/land			14,414			296		0.57	%		2.05	%
Farmland			68,307			496		2.68	%		0.73	%
Total real estate (2)			1,473,611			17,146		57.86	%		1.16	%
Other Commercial			192,577			2,146		7.56	%		1.11	%
Consumer loans (including overdrafts)			2,810			112		0.11	%		3.99	%
Subtotal (2) (3)			1,668,998			19,404		65.53	%		1.16	%
Residential real estate			359,514			1,411		14.12	%		0.39	%
Mortgage warehouse lines			518,333			665		20.35	%		0.13	%
Gross loans, amortized cost		$	2,546,845		$	21,480		100.00	%		0.84	%

		As of March 31, 2025
			Balance			Total Allowance		Percent of Portfolio			Coverage Ratio (1)
Real estate:
Commercial real estate		$	1,380,402		$	17,143		59.84	%		1.24	%
Other construction/land			7,633			145		0.33	%		1.90	%
Farmland			73,206			282		3.17	%		0.39	%
Total real estate (2)			1,461,241			17,570		63.35	%		1.20	%
Other Commercial			181,631			7,255		7.87	%		3.99	%
Consumer loans (including overdrafts)			2,968			140		0.13	%		4.72	%
Subtotal (2) (3)			1,645,840			24,965		71.35	%		1.52	%
Residential real estate			377,592			1,746		16.37	%		0.46	%
Mortgage warehouse lines			283,231			339		12.28	%		0.12	%
Gross loans, amortized cost		$	2,306,663		$	27,050		100.00	%		1.17	%

__________________________
(1)		Coverage ratio equals allowance for credit losses on loans divided by amortized cost.
(2)		Does not include residential real estate.
(3)		Does not include mortgage warehouse lines.

Mortgage warehouse made up 19.4% of the total loan balances and continues to have the lowest reserve rate in the allowance for credit losses at 0.13%. Mortgage warehouse lines historically have incurred nominal losses and, therefore, have a significantly lower reserve than the Bank’s other categories of loans. Further, our residential real estate loans are comprised primarily of jumbo residential loans purchased in 2021 and early 2022 with very strong underwriting. Given the underlying strength of this portfolio, the allowance associated with our residential real estate loans was 0.39% at March 31, 2026. The allowance as a percentage of gross loans, exclusive of mortgage warehouse lines and residential mortgage loans, was 1.18% at March 31, 2026, 1.16% at December 31, 2025, and 1.52% at March 31, 2025. The largest loan segment of commercial real estate continues to maintain a coverage ratio at or above 1.16%.

Management's detailed analysis indicates that the Company's allowance for credit losses on loans should be sufficient to cover life of loan credit losses on loan portfolio balances outstanding as of March 31, 2026, but no assurance can be given that the Company will not experience substantial future losses in excess of the current allowance for credit losses on loans.

About Sierra Bancorp

Sierra Bancorp is the holding Company for Bank of the Sierra (www.bankofthesierra.com), which is in its 49^th year of operations and strives to be the preeminent bank headquartered in the South San Joaquin Valley.

Bank of the Sierra offers a broad range of retail and commercial banking services through its 34 full-service branches located within the counties of Tulare, Kern, Kings, Fresno, Ventura, San Luis Obispo, and Santa Barbara. The Bank also maintains an online branch and provides specialized lending services through its mortgage warehouse division. In 2025, Bank of the Sierra was recognized as one of the strongest and top-performing community banks in the country, with a 5-star rating from Bauer Financial.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future de­velopments and their potential effects on the Company. Readers are cautioned not to unduly rely on forward looking statements. Actual results may differ from those projected. These forward-looking statements involve risks and uncertainties including but not limited to the health of the national and local economies, loan portfolio performance, the Company's ability to attract and retain skilled employees, customers' service expectations, the Company's ability to successfully de­ploy new technology, the success of acquisitions and branch expansion, changes in interest rates, and other factors detailed in the Company's SEC filings, including the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recent Form 10-K and Form 10-Q.

STATEMENT OF CONDITION
(Dollars in Thousands, Unaudited)
ASSETS			3/31/2026				12/31/2025				9/30/2025				6/30/2025				3/31/2025
Cash and due from banks		$	156,372			$	135,628			$	95,501			$	130,012			$	159,711
Investment securities
Available-for-sale, at fair value			615,401				625,330				596,933				668,834				620,288
Held-to-maturity, at amortized cost, net of allowance for credit losses			287,583				290,811				294,511				298,484				302,123
Total investment securities			902,984				916,141				891,444				967,318				922,411
Real estate loans
Residential real estate			349,860				359,514				364,277				371,415				377,592
Commercial real estate			1,381,770				1,390,890				1,404,681				1,392,075				1,380,402
Other construction/land			15,242				14,414				13,420				11,662				7,633
Farmland			66,218				68,307				67,860				67,967				73,206
Total real estate loans			1,813,090				1,833,125				1,850,238				1,843,119				1,838,833
Other commercial			172,653				192,577				185,958				186,620				181,631
Mortgage warehouse lines			478,454				518,333				452,683				401,896				283,231
Consumer loans			2,597				2,810				2,909				2,974				2,968
Gross loans, amortized cost			2,466,794				2,546,845				2,491,788				2,434,609				2,306,663
Allowance for credit losses on loans			(21,250	)			(21,480	)			(25,180	)			(21,680	)			(27,050	)
Net loans			2,445,544				2,525,365				2,466,608				2,412,929				2,279,613
Bank premises and equipment			14,447				14,974				15,056				15,285				15,338
Other assets			235,115				237,171				240,768				244,758				229,110
Total assets		$	3,754,462			$	3,829,279			$	3,709,377			$	3,770,302			$	3,606,183
LIABILITIES AND CAPITAL
Noninterest demand deposits		$	1,028,678			$	995,623			$	1,072,927			$	1,065,742			$	1,037,990
Interest-bearing transaction accounts			604,016				581,746				635,279				603,294				598,924
Savings deposits			364,830				365,064				357,107				352,803				355,325
Money market deposits			153,438				151,760				156,255				148,084				143,522
Customer time deposits			454,459				462,153				476,242				514,596				524,173
Brokered deposits			320,385				320,090				234,950				289,950				189,950
Total deposits			2,925,806				2,876,436				2,932,760				2,974,469				2,849,884
Repurchase agreements			127,811				130,853				125,749				126,509				118,756
Long-term debt			49,506				49,483				49,461				49,438				49,416
Subordinated debentures			36,061				36,017				35,972				35,928				35,883
Other interest-bearing liabilities			185,000				302,700				135,000				154,400				80,000
Total deposits and interest-bearing liabilities			3,324,184				3,395,489				3,278,942				3,340,744				3,133,939
Allowance for credit losses on unfunded loan commitments			660				710				790				810				820
Other liabilities			65,904				68,217				69,562				73,041				119,668
Total capital			363,714				364,863				360,083				355,707				351,756
Total liabilities and capital		$	3,754,462			$	3,829,279			$	3,709,377			$	3,770,302			$	3,606,183

GOODWILL AND INTANGIBLE ASSETS
(Dollars in Thousands, Unaudited)
			3/31/2026				12/31/2025				9/30/2025				6/30/2025				3/31/2025
Goodwill		$	27,357			$	27,357			$	27,357			$	27,357			$	27,357
Core deposit intangible			13				52				132				294				456
Total intangible assets		$	27,370			$	27,409			$	27,489			$	27,651			$	27,813
CREDIT QUALITY
(Dollars in Thousands, Unaudited)
			3/31/2026				12/31/2025				9/30/2025				6/30/2025				3/31/2025
Nonperforming loans		$	10,410			$	13,231			$	14,006			$	14,981			$	18,201
Foreclosed assets			—				1,565				1,839				—				—
Total nonperforming assets		$	10,410			$	14,796			$	15,845			$	14,981			$	18,201
Quarterly net charge offs (recoveries)		$	307			$	2,915			$	209			$	6,580			$	(259	)
Past due and still accruing (30-89)		$	907			$	6,835			$	187			$	3,033			$	3,057
Classified loans		$	31,595			$	31,433			$	32,111			$	35,700			$	37,265
Nonperforming loans / gross loans, amortized cost			0.42	%			0.52	%			0.56	%			0.62	%			0.79	%
NPA's / loans plus foreclosed assets			0.42	%			0.58	%			0.64	%			0.62	%			0.79	%
Allowance for credit losses on loans / gross loans, amortized cost			0.86	%			0.84	%			1.01	%			0.89	%			1.17	%
SELECT PERIOD-END STATISTICS
(Unaudited)
			3/31/2026				12/31/2025				9/30/2025				6/30/2025				3/31/2025
Shareholders' equity / total assets			9.69	%			9.53	%			9.71	%			9.43	%			9.75	%
Gross loans, amortized cost / deposits			84.31	%			88.54	%			84.96	%			81.85	%			80.94	%
Noninterest-bearing deposits / total deposits			35.16	%			34.61	%			36.58	%			35.83	%			36.42	%
Core non-maturity deposits		$	2,150,962			$	2,094,193			$	2,221,568			$	2,169,923			$	2,135,761
Deferred loan (costs)/fees		$	(97	)		$	(35	)		$	9			$	4			$	(99	)

CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, Unaudited)			For the three months ended:
			3/31/2026				12/31/2025				3/31/2025
Interest income		$	41,196			$	43,280			$	41,453
Interest expense			10,588				11,328				11,341
Net interest income			30,608				31,952				30,112
Credit loss expense (benefit) - loans			77				(785	)			1,961
Credit loss (benefit) expense - unfunded commitments			(50	)			(80	)			110
Credit loss (benefit) - debt securities held-to-maturity			(1	)			-				-
Net interest income after credit loss (benefit)			30,582				32,817				28,041
Service charges and fees on deposit accounts			5,673				5,986				5,581
Net (loss) gain on sale of securities available-for-sale			-				(4	)			122
Net gain (loss) on sale of fixed assets			360				(31	)			(2	)
Increase in cash surrender value of life insurance			419				412				237
(Loss) earning on separate account life insurance			(379	)			127				(502	)
Other income			1,896				847				1,206
Total noninterest income			7,969				7,337				6,642
Salaries and benefits			12,700				12,681				13,003
Occupancy expense			3,085				3,182				2,978
Other noninterest expenses			6,039				7,155				6,436
Total noninterest expense			21,824				23,018				22,417
Income before taxes			16,727				17,136				12,266
Provision for income taxes			4,207				4,242				3,165
Net income		$	12,520			$	12,894			$	9,101
TAX DATA
Tax-exempt muni income		$	1,624			$	1,626			$	1,576
Interest income - fully tax equivalent		$	41,628			$	43,712			$	41,872

PER SHARE DATA
(Unaudited)			For the three months ended:
			3/31/2026				12/31/2025				3/31/2025
Basic earnings per share		$	0.96			$	0.97			$	0.66
Diluted earnings per share		$	0.96			$	0.97			$	0.65
Common dividends		$	0.26			$	0.25			$	0.25
Weighted average shares outstanding			12,988,932				13,251,040				13,820,008
Weighted average diluted shares			13,097,176				13,350,518				13,916,341
Book value per basic share (EOP)		$	27.78			$	27.49			$	25.45
Tangible book value per share (EOP) (1)		$	25.69			$	25.42			$	23.44
Common shares outstanding (EOP)			13,093,184				13,273,788				13,818,770

(1)

See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

KEY FINANCIAL RATIOS
(Unaudited)			For the three months ended:
			3/31/2026				12/31/2025				3/31/2025
Return on average equity			13.88	%			14.09	%			10.44	%
Return on average assets			1.39	%			1.39	%			1.02	%
Net interest margin (tax-equivalent) (1)			3.75	%			3.79	%			3.74	%
Efficiency ratio (tax-equivalent) (1) (2)			56.45	%			57.69	%			60.62	%
Net charge-offs (recoveries) / average loans (not annualized)			0.01	%			0.12	%			(0.01	)%

(1)		Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
(2)		See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

NON-GAAP FINANCIAL MEASURES
(Dollars in Thousands, Unaudited)		As of:
			3/31/2026				12/31/2025				3/31/2025
Total stockholders' equity		$	363,714			$	364,863			$	351,756
Less: goodwill and other intangible assets			27,370				27,409				27,813
Tangible common equity		$	336,344			$	337,454			$	323,943
Total assets		$	3,754,462			$	3,829,279			$	3,606,183
Less: goodwill and other intangible assets			27,370				27,409				27,813
Tangible assets		$	3,727,092			$	3,801,870			$	3,578,370
Total stockholders' equity (bank only)		$	439,623			$	442,092			$	432,518
Less: goodwill and other intangible assets (bank only)			27,370				27,409				27,813
Tangible common equity (bank only)		$	412,253			$	414,683			$	404,705
Total assets (bank only)		$	3,751,904			$	3,826,215			$	3,603,679
Less: goodwill and other intangible assets (bank only)			27,370				27,409				27,813
Tangible assets (bank only)		$	3,724,534			$	3,798,806			$	3,575,866
Common shares outstanding			13,093,184				13,273,788				13,818,770
Book value per common share (total stockholders' equity / shares outstanding)		$	27.78			$	27.49			$	25.45
Tangible book value per common share (tangible common equity / shares outstanding)		$	25.69			$	25.42			$	23.44
Equity ratio - GAAP (total stockholders' equity / total assets			9.69	%			9.53	%			9.75	%
Tangible common equity ratio (tangible common equity / tangible assets)			9.02	%			8.88	%			9.05	%
Tangible common equity ratio (bank only) (tangible common equity / tangible assets)			11.07	%			10.92	%			11.32	%

		For the three months ended:
Efficiency Ratio:			3/31/2026				12/31/2025				3/31/2025
Noninterest expense		$	21,824			$	23,018			$	22,417
Divided by:
Net interest income			30,608				31,952				30,112
Tax-equivalent interest income adjustments			432				432				419
Net interest income, adjusted			31,040				32,384				30,531
Noninterest income			7,969				7,337				6,642
Less gain (loss) on sale of securities			-				(4	)			122
Less (loss) gain on sale of fixed assets			360				(31	)			(2	)
Tax-equivalent noninterest income adjustments			11				143				(70	)
Noninterest income, adjusted			7,620				7,515				6,452
Net interest income plus noninterest income, adjusted		$	38,660			$	39,899			$	36,983
Efficiency Ratio (tax-equivalent)			56.45	%			57.69	%			60.62	%
		For the three months ended:
Pre-tax pre-provision income:			3/31/2026				12/31/2025				3/31/2025
Net income		$	12,520			$	12,894			$	9,101
Add: Provision for income taxes			4,207				4,242				3,165
Add: Provision for credit losses			26				(865	)			2,071
Pre-tax pre-provision income		$	16,753			$	16,271			$	14,337

NONINTEREST INCOME/EXPENSE
(Dollars in Thousands, Unaudited)
		For the three months ended:
Noninterest income:		3/31/2026				12/31/2025				3/31/2025
Service charges and fees on deposit accounts
Interchange income on debit cards		$	1,941			$	2,031			$	1,953
Business analysis fees			1,030				1,202				1,034
Overdraft fee income			1,324				1,376				1,245
Other service charges and fees			1,378				1,377				1,349
Net (loss) gain on sale of securities available-for-sale			—				(4	)			122
Gain (loss) on sale of fixed assets			360				(31	)			(2	)
Increase in cash surrender value of life insurance			419				412				237
(Loss) earning on separate account life insurance			(379	)			127				(502	)
Other			1,896				847				1,206
Total noninterest income		$	7,969			$	7,337			$	6,642
As a % of average interest-earning assets (1)			0.96	%			0.86	%			0.81	%
Noninterest expense:
Salaries and employee benefits
Salary and incentives		$	10,409			$	10,481			$	10,687
Employee benefits			2,288				2,134				2,300
Deferred compensation			3				66				16
Occupancy costs			3,085				3,182				2,978
Advertising and marketing costs			333				370				348
Data processing costs			1,583				1,545				1,498
Deposit services costs			1,948				2,077				1,991
Loan services costs
Loan processing			113				91				138
Foreclosed assets			17				3				4
Other operating costs			779				951				928
Professional services costs
Legal and accounting services			557				511				651
Director's costs			356				350				310
Deferred directors' fees cost/(benefit)			(572	)			99				(444	)
Other professional services			698				774				706
Stationery and supply costs			97				98				101
Sundry and tellers			130				286				205
Total noninterest expense		$	21,824			$	23,018			$	22,417
As a % of average interest-earning assets (1)			2.64	%			2.70	%			2.75	%
Efficiency ratio (tax-equivalent) (2)(3)			56.45	%			57.69	%			60.62	%

____________________________
(1)		Annualized
(2)		Computed on a tax equivalent basis utilizing a federal income tax rate of 21%.
(3)		See reconciliation of non-GAAP financial measures to the corresponding GAAP measurement in "Non-GAAP Financial Measures".

AVERAGE BALANCES AND RATES
(Dollars in Thousands, Unaudited)
		For the quarter ended							For the quarter ended							For the quarter ended
		3/31/2026							12/31/2025							3/31/2025
		Average Balance (1)		Income/ Expense		Yield/ Rate (2)			Average Balance (1)		Income/ Expense		Yield/ Rate (2)			Average Balance (1)		Income/ Expense		Yield/ Rate (2)
Assets
Investments:
Interest-earning due from banks		$	23,411	$	211	3.66	%		$	14,990	$	173	4.58	%		$	54,641	$	590	4.38	%
Taxable			709,417		7,993	4.57	%			700,921		8,233	4.66	%			735,197		9,138	5.04	%
Non-taxable			203,801		1,624	4.09	%			202,638		1,626	4.03	%			197,558		1,576	4.10	%
Total investments			936,629		9,828	4.44	%			918,549		10,032	4.52	%			987,396		11,304	4.81	%
Loans: (3)
Real estate			1,822,696		22,391	4.98	%			1,843,428		23,136	4.98	%			1,824,428		21,988	4.89	%
Agricultural production			62,795		724	4.68	%			66,833		822	4.88	%			76,316		1,030	5.47	%
Commercial			111,734		1,597	5.80	%			114,782		1,782	6.16	%			103,152		1,515	5.96	%
Consumer			2,601		55	8.58	%			2,771		74	10.59	%			3,286		69	8.52	%
Mortgage warehouse lines			414,272		6,589	6.45	%			438,892		7,418	6.71	%			313,251		5,529	7.16	%
Other			2,146		12	2.27	%			2,361		17	2.86	%			2,361		18	3.09	%
Total loans			2,416,244		31,368	5.26	%			2,469,067		33,249	5.34	%			2,322,794		30,149	5.26	%
Total interest-earning assets (4)			3,352,873		41,196	5.04	%			3,387,616		43,281	5.12	%			3,310,190		41,453	5.13	%
Other earning assets			17,069							43,768							17,062
Non-earning assets			283,935							260,567							273,926
Total assets		$	3,653,877						$	3,691,951						$	3,601,178
Liabilities and shareholders' equity
Interest-bearing deposits:
Demand deposits		$	224,131	$	1,104	2.00	%		$	234,450	$	1,282	2.17	%		$	207,774	$	1,292	2.52	%
NOW			356,648		75	0.09	%			362,791		93	0.10	%			378,338		119	0.13	%
Savings accounts			363,512		105	0.12	%			358,492		108	0.12	%			352,645		90	0.10	%
Money market			154,469		616	1.62	%			162,715		725	1.77	%			145,092		571	1.60	%
Time deposits			459,482		3,203	2.83	%			470,338		3,546	2.99	%			531,299		4,412	3.37	%
Brokered Deposits			319,199		3,219	4.09	%			218,985		2,439	4.42	%			244,561		2,888	4.79	%
Total interest bearing deposits			1,877,441		8,322	1.80	%			1,807,771		8,193	1.80	%			1,859,709		9,372	2.04	%
Borrowed funds:
Federal funds purchased			42,782		395	3.74	%			114,139		1,142	3.97	%			183		2	4.43	%
Repurchase agreements			128,430		63	0.20	%			121,857		46	0.15	%			112,361		69	0.25	%
Short term borrowings			3,988		38	3.86	%			8,802		94	4.24	%			4,043		45	4.51	%
Long term FHLB Advances			77,778		749	3.91	%			80,000		788	3.91	%			80,000		771	3.91	%
Long term debt			49,492		431	3.53	%			49,469		429	3.44	%			49,402		430	3.53	%
Subordinated debentures			36,034		590	6.64	%			35,989		637	7.02	%			35,855		652	7.37	%
Total borrowed funds			338,504		2,266	2.71	%			410,256		3,136	3.03	%			281,844		1,969	2.83	%
Total interest-bearing liabilities			2,215,945		10,588	1.94	%			2,218,027		11,329	2.03	%			2,141,553		11,341	2.15	%
Demand deposits - noninterest bearing			1,005,769							1,032,617							1,003,322
Other liabilities			66,346							78,323							102,806
Shareholders' equity			365,817							362,984							353,497
Total liabilities and shareholders' equity		$	3,653,877						$	3,691,951						$	3,601,178
Interest income/interest earning assets						5.04	%						5.12	%						5.13	%
Interest expense/interest earning assets						1.28	%						1.33	%						1.39	%
Net interest income and margin (5)				$	30,608	3.75	%				$	31,952	3.79	%				$	30,112	3.74	%

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(1)		Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.
(2)		Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective federal tax rate.
(3)		Loans are gross of the allowance for expected credit losses. Loan fees have been included in the calculation of interest income. Net loan (costs) fees and loan acquisition FMV amortization were ($0.3) million and ($0.3) million for the quarters ended March 31, 2026 and 2025, respectively, and $(0.3) million for the quarter ended December 31, 2025.
(4)		Non-accrual loans have been included in total loans for purposes of computing total earning assets.
(5)		Net interest margin represents net interest income as a percentage of average interest-earning assets.

Category: Financial

Source: Sierra Bancorp

View source version on businesswire.com: https://www.businesswire.com/news/home/20260427049172/en/

Kevin McPhaill, President/CEO

[phone] or (888) 454-BANK

www.sierrabancorp.com

Original: Sierra Bancorp Reports First Quarter 2026 Results